Wednesday, January 02, 2008

Farmers Insurance Urged Employees to Pay as Little as Possible on Claims

'Chihuahua' Regulator Takes Bullmastiff-Bite in Insurer Fight
By David Dietz
Dec. 27 (Bloomberg) -- The North Dakota Insurance Department, which had a $4 million budget in 2007, ranks 48th in resources among state industry regulators. Only South Dakota and Wyoming have less to spend. In 2007, the tiny department did what all other state regulators failed to do.
After an investigation that began in 2004, the agency documented that Farmers Insurance Group of Los Angeles, the nation's fifth-largest auto insurer, had run nationwide promotions urging its employees to increase profits by paying as little as possible on claims. In June, the department fined Farmers $750,000.
``Some people think that since I came from a small state, I had no firepower,'' says Jim Poolman, who was commissioner from 2001 to August 2007. ``You could think of us like a little Chihuahua nipping at your heels.''
Farmers gave employees goals to tighten payments and handed out bonuses when they met the objectives, the department found. Farmers' campaign, which included brochures and pep talks, had slogans such as ``Quest for Gold'' and ``Bring Back a Billion.''
Poolman says he took on Farmers when other state insurance regulators ignored its practices or never noticed them. In fining Farmers, the department said the company had violated state laws requiring insurers to deal fairly with customers.
It also ordered Farmers to stop encouraging employees to limit payouts. The company, while saying it didn't violate any laws, consented to the fine and agreed to remind employees to evaluate claims objectively.
`Strongly Disagrees'
``Farmers Insurance denies and strongly disagrees with the North Dakota Department of Insurance allegations,'' Farmers spokesman Jerry Davies says.
Farmers' squeeze on customers began after the company paid billions of dollars in claims for disasters such as the 1994 Northridge earthquake in Southern California, according to North Dakota's findings.
North Dakota investigators found that a Farmers office in Bismarck had been told to keep payments within the previous year's average or within set ranges instead of considering cases on their merits. The Bismarck office was also instructed to try to pin more claim denials on fraud, the state found.
``Because meeting these unfair and arbitrary goals was a part of the performance evaluation process and, therefore, linked to an employee's pay, a potential conflict of interest was created between meeting those goals and effectuating a prompt, fair and equitable settlement of each claim on its merits,'' the state's consent order said.
Poolman says he didn't tell other states of his investigation because the probe was still in progress. Still, he says, state insurance departments should have known enough about Farmers' practices to do their own probes. ``It was an issue that was out there,'' he says.
Editor: Jonathan Neumann, Charles Siler
To contact the reporter on this story: David Dietz in San Francisco at

Copied without permission (Fair Use) from Bloomberg


Anonymous berzerker said...

Thank God the message is getting out there. Insurers have a fiduciary responsibility to their policyholders to treat them fairly! $750,000 to Farmers is like $100.00 to the average Joe, but I applaud Jim Pooleman for his courageous stand and successful prosecution.

1/11/2008 5:35 AM  
Anonymous Anonymous said...

Well I guess the general public has allowed the insurance cos. to control their lives's,I called my insurance 1 800 number and told them I had a claim on my auto that was damaged I told them I was going to take it to XYZ repair facilitate they told me that XYZ was not on their approved list and I said what does that mean and why is that so important?The person on the line told me that they would not be able to guarantee the work should I take it to a non approved shop. I told the person on the line that I was still going to take it to XYZ. and they again told me remember we can not warranty the work.

Let it be known that this is called directing the work to shops that will buckle under to their price structure it is illegal and State law prohibits this.

Look around your home town,how many mom and pop stores exist?,auto parts stores,independent drug stores still in practice on their own?,Hardware stores etc.

The Insurance Cos,tell you how many pills you can take in a month,which Dr's are on their approved list and which clinic,now they tell you where to take your car for collission repair.Its a shame to look at the small business men that have been forced out of business because of falling victom to the Ins Cos.

The insurance people want to enter the collision business and have been challanged in a number of States,the next time you shop take your car to any shop you want because they will repair it with original manufactured parts(OEM). The Insurance people want to control costs,send the car to their approved shops and when they have driven the repair cost down to the point that the shop can't survive they move on to the next shop telling them they will send them cars for a certin price. It will not take long,and you will have givin up your choice again.

The Insurance Cos. have an agenda,profits at our expense.I will tellyou how many pills,how much viagra,how much colestrol,how much blood pressure meds. etc.

One thing,fight them on what they want to pay for your damage,and support your local collision shop.

2/12/2008 8:40 PM  
Anonymous Dwayne Hall said...

I work as a public adjuster and know firsthand how Farmers will deny claims wothout good reason. I am meeting with a Farmers adjuster tommorow and will get some nice peoples home repaired by them after denying the claim at first.

Dont mess around, get a public adjuster involved in your claim and get the maximum allowable by law. Dwayne Hall, 903-733-4664

12/22/2009 9:44 PM  

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